Equifax has announced its latest National Consumer Credit Trends Report, the total balance of new credit for revolving home equity loans year-to-date in July 2014 is $65.9 billion, a six-year high and a year-over-year increase of 21.4 percent. Similarly, the total number of new loans in that same time is more than 670,000, a six-year high and a year-over-year increase of 16.1 percent.
"The sharp rise in percentage terms in home equity lines of credit (HELOCs) is a result of both increasing availability of home equity that homeowners have accumulated in their homes as well as a preference shift by lenders away from home equity installment loans in favor of HELOCs," said Amy Crews Cutts, Equifax chief economist. "Home equity installment loans require a higher compliance burden on lenders and for consumers home equity lines of credit offer tremendous advantages in terms of when they draw the loan money and how the payments are structured. More and more lenders are offering amortizing HELOCs in addition to their HELOCs with an interest-only term."
Cutts went on to add, "While the recent increases in HELOC lending seem large, the total volume of HELOC lending is just over a third of what it was prior to the financial crisis. HELOCs will continue to gain favor in coming year as homeowners who want to renovate their homes or fund other needs will not want to do a cash-out refinancing if the interest rate on their first mortgage is very low."
Other highlights from the most recent Equifax data include:
Home finance
►The total balance of home finance write-offs year-to-date through September is $75.7 billion, 36.7 percent lower than same time a year ago; and
►Delinquent balances, those 30 or more days past due, represent 4.55 percent of outstanding balances, a decrease of 21.4 percent from the same time last year.
First mortgage
►Write-off balances on first mortgages year-to-date through September represent 0.85 percent of outstanding balances, a decrease of 31.8 percent from same time a year ago;
►Delinquent first mortgages, those 30 or more days past due, represent 4.69 percent of outstanding balances, a decrease of 21.8 percent from same time a year ago; and
►Similarly, the total balance of first mortgages (90-days past due or in foreclosure) is $207 billion, a decrease of 30 percent year-over-year and the lowest level in more than five years.
Home equity revolving
►The total balance of home equity revolving loans in September 2014 is $477.7 billion, a decrease of 3.9 percent from same time a year ago and a five-year low. Similarly, the total number of loans outstanding is 10.2 million, the lowest total in 10 years;
►Delinquent balances, those 30 or more days past due, represent 2.4 percent of outstanding balances, a decrease of 10.2 percent from the same time last year; and
►The total balance of severely delinquent home equity revolving loans (90-days past due or in foreclosure) in September 2014 is $7.5 billion, a decrease of 13.7 percent from same time a year ago.
Home equity installment
►The total balance of severely delinquent home equity installment loans (90-days past due or in foreclosure) in September 2014 is $2.77 billion, a decrease of 30.8 percent from same time a year ago;
►The total balance of home equity installment loans is $125.4 billion, a decrease of eight percent from same time a year ago, while the total number of loans outstanding is just over 3.7 million, a year-over-year decrease of 7.1 percent; and
►The total balance of home equity installment loans in foreclosure is $386.7 million, a five-year low and a decrease of nearly 14 percent from same time a year ago.
